Digital-first platforms are rewriting retirement planning, says Franklin Templeton’s Crossley

Digital-first investment platforms are no longer just places to trade stocks; they are fast becoming central hubs for saving, spending, and long-term planning and, in the process, they are reshaping the competitive landscape for retirement.

That’s according to Robert Crossley, head of Industry Advisory Services at Franklin Templeton who has been speaking with InvestmentNews about the evolution of these platforms.

“Many of these platforms started out as trading venues but have increasingly realized the stickiness of bringing together investing, saving and spending into one convenient location,” he says. “With that understanding, many now offer long-term savings or retirement planning tools for their users, meaning they are capturing an ever-growing share of the client’s wallet.”

That integrated model stands in stark contrast to the way much of the traditional advisory industry still operates.

“The traditional advisory industry has yet to accomplish this condensed model, with much of its operations, as well as its client data, still existing in decades-old siloes,” Crossley explains. “Importantly, the industry’s communication methods are increasingly ineffective and impersonal, while neobrokers deliver customized experiences based on the data they’re able to collect natively through their apps.”

At the heart of the challenge is the aging technology that underpins much of the retirement system.

“Much of the retirement infrastructure is powered by mainframe technologies that date back to the 1950s,” says Crossley. “This archaic structure makes it incredibly difficult to integrate modern APIs, share data, or offer the personalization that today’s workers expect.”

The cost of maintaining that system is substantial. “Estimates show the industry spends nearly $12 billion annually just on servicing these plans, with analysis suggesting up to 30% of that cost is unnecessary waste driven by these legacy inefficiencies,” he says.

Crossley has warned that incumbents risk losing trillions in future assets to neobrokers, and the data suggests that shift is already well underway.

“The migration is already happening,” he says. “Data from Cornerstone Advisors estimates that $2.15 trillion has already left banks for fintech investment accounts, with a surprising 65% coming from Gen X and Boomers, not just Gen Z.”

Younger generations

The drivers go beyond fees or product choice. “This shift is largely driven by engagement and evolving trust standards in younger generations,” Crossley notes. “Just 18% of millennials and 14% of Gen Z are likely to consult traditional financial professionals, with the vast majority preferring to seek advice from family, friends, or social media.”

Neobrokers are designing their experiences around those behaviors. “Neobrokers understand today’s investor, offering short videos from financial influencers and social account integration for communal interaction,” he says. “It is much easier for neobrokers who already have access to and the trust of younger generations to transition clients to an advisory relationship than it is for incumbents in retirement to move into broader investing.”

Investor expectations have evolved alongside consumer technology. “Investors now expect their financial life to be as curated as their media consumption,” Crossley says. “They live in a world of algorithmic personalization, from Netflix to TikTok, and they expect their financial tools to be just as responsive.”

That expectation has fundamentally changed how people engage with retirement accounts. “The expectation has evolved from ‘set it and forget it’ to active, mobile-first engagement where they can see, move, and manage their money in real-time,” he explains. “At the moment, that interface is via the mobile or digital wallet which are growing in popularity and use cases.”

Looking ahead, Crossley sees an even bigger structural shift. “On top of that, the cryptographically-protected wallet offers even more potential use cases,” he says. “In time, we see a fundamental shift from an ‘account-based’ view of the world to a ‘wallet-based’ one, where the user, not the institution, holds the center of gravity.”

Education and engagement

Fintech firms have also redefined how education and engagement work. “Fintechs excel at gamified education and behavioral nudges that meet users where they are,” Crossley says. “Instead of overwhelming users with content-heavy portals that go unread, fintechs use bite-sized, personalized prompts to drive action.”

Data is the key enabler and a persistent weakness for legacy providers. “This is accomplished using data, which is where the traditional finance industry tends to fall short due to vertical siloes and fragmented information,” he explains.

Fintechs are also broadening the scope of what retirement planning includes. “Fintechs also excel at bridging the gap between ‘health’ and ‘wealth’, treating them as one ecosystem,” Crossley says. “Legacy firms should look at how these apps integrate decisions like HSA contributions and student loan pay-downs directly into the retirement flow.” By changing how data is shared, he adds, “By incentivizing data sharing, advisors can build richer client profiles that allow for more customized servicing.”

The convergence of wallets and payroll could redefine workplace savings altogether. “We anticipate the wallet becoming a permanent, portable container for workplace savings, effectively untethering retirement from the employer,” Crossley says.

He describes a future where the mechanics of retirement are abstracted away from employers and providers. “An individual’s 401(k) contribution rate, salary, default investment selection, payroll provider and deposit bank could all be tokenized and deposited into their workplace wallet,” he explains. “Each pay period, the underlying smart contracts would automatically execute according to the individual’s preferences.”

The implication is ownership and portability. “Turning benefits like these into tokens and giving participants a wallet in which to hold them allows those benefits to become assets that the individual actually owns, meaning they can be moved easily from one employer or provider to another.”

Modernization challenges

For providers worried about disruption, Crossley argues modernization doesn’t have to mean ripping everything out at once.

“Industry players could collaborate on a new blockchain-based, shared data layer which could create a layer of interoperability between providers without ripping out the underlying mainframes immediately,” he says. “This would allow different providers to view a single source of truth for a participant without a full system overhaul.”

Broader demographic and labor trends are adding urgency to the need for change. “People are living much longer than they were when we designed large parts of our retirement system: today’s 20 year-olds can expect to live to 100,” Crossley notes.

At the same time, work itself is being reshaped. “AI is redefining what aspects of the job are valuable vs what can be commoditized, which will impact employment and likely influence a large scale reorganization of labor markets,” he says.

Income patterns are becoming more complex as well. “Many workers are holding multiple jobs or taking advantage of new technology which makes it easier to supplement their income remotely or online,” Crossley explains. “This is also changing retirement, as many retirees use gig platforms or start businesses to supplement their retirement income.” The conclusion is stark: “These patterns in how individuals earn, save and invest are not compatible with the traditional retirement planning model.”

As expectations shift, advisors must rethink how they engage. “Advisors should work with clients to strategize a financial wellness plan that reflects the holistic picture of an individual’s entire life, accounting for personal values like health, time with family, or the ability to pursue hobbies and passion projects,” Crossley says.

That engagement must happen in real time and in familiar environments. “Engagement needs to happen on the platforms clients already use, leveraging AI and data analytics to offer proactive, real-time insights rather than reactive, annual reviews.”

Taking proactive steps

Crossley points to several practical steps providers can take now. “Defragment the client data that is currently held across multiple stakeholders (such as recordkeepers, advisors and benefit administrators) to create a more comprehensive view of the client,” he says. “Look to partners in the banking and wealth management space who have already built comprehensive cohort models of clients.”

Product design must also evolve. “Make default product offerings more client-centric, instead of the product-centric approach that has been in practice for decades,” Crossley advises. “This means moving beyond simple age-based target dates and adopting models that factor in spending behaviors, debt levels, and household data.”

And finally, experimentation is critical. “Experiment with digital wallets for gig workers or those with multiple income sources to test the viability of portable benefits.”